Tax Increment Financing Update - TN Comptroller · PDF fileTax Increment Financing Update...
Transcript of Tax Increment Financing Update - TN Comptroller · PDF fileTax Increment Financing Update...
Tax Increment Financing Update
Presentation will begin at 12:15 PM
Betsy Knotts, Office of General Counsel
Kelsie Jones, State Board of Equalization
Today’s Agenda:
Introduction to Tax Increment Financing (TIF)
Comptroller’s Statutory Duties Related to TIF
Q & A—Partnering with Local Governments
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Basics of Tax Increment Financing
TIF is the act of borrowing
against a future value
In other words, upfront cash to construct a project
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Basics of Tax Increment Financing
Authorized Issuers:
Housing Authority– 1978 Pub. Acts, c. 854
Industrial Development Corporation (“IDB”)—
2004 Pub. Acts, c. 662
Community Redevelopment Agency—1998
Pub. Acts, c. 987
*Please note only IDBs are authorized to use tax
increment revenues to pay project costs directly.
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Tax Increment Financing in theTennessee Code Annotated (T.C.A.)
1978
T.C.A. § 13-20-202, Housing Authority
2004
T.C.A. § § 7-53-312 and -314, Industrial Dev. Board
2012
T.C.A. § 9-23-101 et seq., TIF Uniformity Act
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TIF Approval Process
IDB Approves Economic Impact Plan
City Approves the Plan
Formal Creation of Tax Increment Area
Incremental Increases Transferred to TIF Agency
County Approves the Plan
COT and ECD Approve the Extended Plan Term or Project
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Examples of Financing Documents:
Tax Increment Plan
Economic Impact Plan
Redevelopment Plan
Tax Increment Revenue Note
Development Agreement
Guaranty Agreement
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Authorized TIF Projects
Housing Authority
Redevelopment and Urban Renewal
Remove or reduce blight
Rehabilitation or conservation work
Industrial Development Board
Project defined at T.C.A. § 7-53-101(13)
24 Subparts defining economic development
BROAD
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The Uniformity in Tax Increment Financing Act of 2012 (TCA Section 9-23-101 et seq.)
The 2012 Act addressed the following issues:
No state oversight
TIF revenues accumulated off budget
Inconsistent reporting requirements
The 2012 Act applies to newly created or amended tax increment plans for which public hearings are held on or after March 21, 2012.
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The Uniformity in Tax Increment Financing Act of 2012 (TCA Section 9-23-101 et seq.)
Best Interest Determination Required Plan Term Extends beyond 20 or 30 years
IDB uses TIF to finance a privately-owned project other
than parking and storm water improvements and for
general economic development purposes
TCA § 9-23-103(a)(2)(B)Excess taxes beyond amounts necessary to fund or reserve for
eligible expenditures under the applicable tax increment
statute, may be applied to principal and interest of debt
incurred to finance such eligible expenditures, or shall revert
to the taxing agency general fund.
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Best Interest Letters
Graceland Project—Economic Impact Plan
Oak Ridge Mall—Economic Impact Plan
Pulaski-Giles IDB Hotel Project
Sulphur Dell Site—Redevelopment Plan
Tullahoma Northgate Mall—Economic Impact
Plan
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The Uniformity in Tax Increment Financing Act of 2012 (TCA Section 9-23-101 et seq.)
T.C.A. § 9-23-106
Upon creation, file the property information, base
tax amount, and authorizing resolutions with the
Comptroller’s office, the assessor of property,
and the chief financial officer of each taxing
agency
By October 1 each year, tax increment agencies
to file annual statements of tax increment
revenues with Comptroller’s office
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TIF Plan Filing and Annual Increment Reporting Status
As stated earlier, the TIF development plan and annual increment received are to be filed with the Comptroller’s office
Compliance level is lower than desired but currently improving
Annual correspondence reminders from the Comptroller’s office
Working with every county to assemble a complete statewide database
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Graceland Economic Impact Plan
Privately-owned archive studio, hotel and conference
center, museum attractions and retail
Passed “but for” test
Boundaries limited to 120 acre Graceland Campus
Only 50% of the tax increment revenues generated in
the plan area will be utilized for project purposes; the
remaining 50% will be distributed to the local
governments
Pooled incremental sales and property tax revenues,
borrower payments, and tourism surcharges.
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Measuring TIF Effectiveness
Get updates from the finance director on
amounts outstanding and receive a list of active
plan areas with estimated end dates
Do your own “but for” or necessity test
Ask questions about the projected values
Remember only IDBs may use incremental
revenues to pay project costs directly
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TIF at a Turning Point
GASB Statement No. 77, Tax Abatement
Disclosures, approved August 2015
New financial statement disclosures required for
state and local governments for fiscal year
beginning July 1, 2016 and ending June 30,
2017
New disclosure requirements supplement
existing state reporting requirements
Economic Development Policies21
Your Questions…Accountability
Should policies be required?
How should the established criteria be
communicated to the authorizing entity prior to
receiving any formal approval?
Should TIF projects be targeted and
temporary? How do we know when they end?
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Your Questions…Transparency
What are TIF best practices in Tennessee?
Are TIF discussions conducted in the
“sunshine”?
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Your Questions…Duration
What are the pros and cons of reauthorizing a
tax increment allocation when the original plan
has run its course?
If the decision is made to amend the plan to
keep developing the area, what questions
should the authorizing entity ask?
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Partnering with Local Governments
What oversight authority does the Comptroller
have, when is it exercised, and what prompts it
to be used?
What other resources are available to help
facilitate the proper creation of tax increment
areas?
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Contact Information
Betsy KnottsAssistant General CounselComptroller of the Treasury Suite 1700, James K. Polk Bldg.505 Deaderick St.Nashville, TN 37243Phone: (615) [email protected]
Kelsie JonesExecutive SecretaryState Board of Equalization9th Floor, Snodgrass TN Tower312 Rosa L. Parks AvenueNashville, TN 37243-1102Phone: (615) [email protected]
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